S&P cut the long-term debt rating for the U.S. by one notch to AA+ from AAA late Friday. The move wasn't unexpected, but it comes when investors are already feeling nervous about a weak U.S. economy, European debt problems and Japan's recovery from its March earthquake.
Ahead of the opening bell, Dow Jones industrial futures are down 222 points, or 1.9 percent, to 11,181. S&P 500 futures are down 27, or 2.3 percent, to 1,171. Nasdaq 100 futures are down 50, or 2.3 percent, to 2,134.
In Europe, the German DAX index fell 2 percent. In Asia, Japan's Nikkei 225 index fell 2.2 percent.
Prices for U.S. government debt, though, rose. That's because Treasurys are still seen as one of the world's few safe investments. The yield on the 10-year Treasury note fell to 2.46 percent from 2.57 percent late Friday. A bond's yield drops when its price rises.
But where Treasury prices are at end of the day will be more important than where they are at the start, Bill O'Donnell, head of U.S. Treasury strategy at RBS Securities, wrote in a report.
"We will learn more about the future path of Treasury prices at today's close than we will by the open," he said. "I want to see how the market clears and how it synthesizes the cacophony of news of late."
Gold is another investment that investors traditionally run to for safety. It rose above $1,700 per ounce for the first time.
"Investors are concerned about a rising risk of global recession, credit downgrades especially now in the eurozone, such as France, the threat of a major bank bust and a global liquidity trap as investors stay in cash," said Neil MacKinnon, global macro strategist at VTB Capital.
Investors are worried that Spain or Italy could become the next European country to be unable to pay its debt. The European Central Bank said it will buy Spanish and Italian bonds in hopes of helping the countries avert a possible default.
Seeking to avert panic spreading across financial markets, the finance ministers and central bankers of the Group of 20 industrial and developing world issued a joint statement Monday saying they were committed to taking all necessary measures to support financial stability and growth.
"We will remain in close contact throughout the coming weeks and cooperate as appropriate, ready to take action to ensure financial stability and liquidity in financial markets," they said.
Crude oil, natural gas and other commodities fell on worries that a weaker global economy will mean less demand. Oil fell $3.40 to $83.48 per barrel.